The name is, perhaps, unfortunate. And the company hoping to exploit this technology in Britain sounds more like a sci-fi monster than an energy firm. Earthquakes and tales of flame-spewing bath taps do not help. Yet the controversial technique of fracking, which is used to blast hydrocarbon fuels from rock deep underground, promises (say its fans) to solve Britain’s energy crisis, slash our carbon emissions and to turn the Lancashire Riviera into an unlikely new Arabia.

Yesterday, a report commissioned by the Government recommended that fracking for natural shale gas should be allowed to resume, despite fears of pollution and the fact that last year two minor earthquakes were almost certainly triggered by early test drillings. Cuadrilla Resources, the British firm hoping to make a fortune from the estimated 200 trillion cubic feet of natural gas lying beneath our rocks, is delighted, and the Greens dismayed.

Proponents of fracking say that there is enough gas to meet Britain’s energy needs for 70 years. Furthermore, the fuel it releases, natural gas (methane), is relatively “clean”. Fracked gas could be the 21st-century equivalent of North Sea oil, they say. But not everyone is convinced. Greens point out that the shale gas that the frackers hope to extract from deep underground is just another fossil fuel which, when burned, will generate climate-changing CO2.

And if there really is as much of it under our soil as the geologists suspect, we can wave goodbye to any hope of slashing our carbon emissions as it is burnt in homes and power stations.

Furthermore, contamination issues aside, fracking is positively dangerous, say its opponents. Last year, an initial report confirmed that test drillings were, as suspected, the cause of two minor earthquakes that struck Lancashire. The report had been commissioned by Cuadrilla, which was behind three shale-gas test drillings a few miles outside Blackpool. After protests, Cuadrilla temporarily suspended fracking operations.

One tremor of magnitude 2.3 shook the Fylde countryside on April 1, followed by a second of magnitude 1.4 on May 27. Some residents claimed that they were woken in their shaking beds.

For their part, scientists are divided. Many are convinced that not only is fracking safe but that it might provide safe, cheap, homegrown energy in almost unlimited quantities. But others warn that this technique poses risks in a heavily built-up area, and that we should proceed with caution.

So what exactly is fracking and are we really looking at a new gas bonanza for Britain that would mean we are no longer reliant on energy supplies from abroad as fuel prices rocket?

A contraction of “hydraulic fracturing”, it is a technique, pioneered in the 1940s, that is used to extract natural gas or oil from sedimentary rocks hundreds of metres underground. Fracking has been a huge energy story for a couple of years now because of the discovery of vast amounts of gas trapped in shale beds, both in the States and in Britain, which can only be exploited by this technique.

Shale is a tough, fine-grained sedimentary rock, formed from compressed mud which was laid down on the beds of prehistoric swamps and estuaries. The shale – which, in the case of the British gas deposits, is about 320 million years old – is rich in organic matter, the corpses of sea animals and plankton. Over time, these organic deposits were converted by heat and pressure into hydrocarbons – oils and gases. But shale gas is hard to get at.

Regular natural gas, which is found under the North Sea in soft sandstone or chalk, can be tapped simply by drilling a well and letting it rise to the surface under its own pressure. Shale gas is different; trapped in minute pores, it needs to be blasted out – fracked – using a mixture of water, ground rock, dissolved nitrogen and other chemicals pumped at high pressure down the borehole.

It is a violent, aggressive process (hence the earthquakes), but the potential is huge. Natural gas prices have doubled in the past five years and there is a massive market for a cheaper substitute. In America, the shale-gas revolution has transformed the market, making hundreds of farmers millionaires.

The US Geological Survey estimates that as much as two thirds of America’s hydrocarbon production will eventually come from shale. In Britain, a carboniferous seam rich in shale gas lies under much of north-west England – enough to last for decades, according to Cuadrilla.

And, say fans of fracking, it gets better. Burning shale gas to make electricity produces only half the carbon emissions of coal. Shale gas is cheaper to extract than undersea gas and supporters say it represents the quickest and cheapest way of making the dramatic cuts in Britain’s carbon emissions that we are committed to under international treaties.

But the technique alarms many. The award-winning 2010 US documentary Gaslands claimed that shale-gas fracking in America has resulted in contaminated boreholes, earthquakes, sickness and gas leaking into water pipes which can, alarmingly, catch fire when people have a shower. And there are particular risks associated with the British gas deposits.

The Bowland Shales, which underlie much of Lancashire, are subject to immense geological stresses, the result of the tectonic forces which caused the formation of the Atlantic Ocean 100 million years ago. In addition, this part of the country was, until 15,000 years ago, buried under a mile of ice.

When the Ice Age ended, this heavy burden was lifted and the rocks have been flexing and cracking ever since. Referring to Cuadrilla’s initial findings last autumn, Dr Stuart Haszeldine of Edinburgh University, said: “Although this is a very thorough report, I would be very cautious before proceeding with more commercial drilling.” The report made several recommendations, including the use of lower volumes of water and a more rapid reduction in pressure.

In February, at a conference in Vancouver, scientists from the University of Texas presented findings suggesting that fracking is no more likely to contaminate ground water supplies than any other drilling technique, although opponents will point out that this merely says that drilling per se should not be allowed near residential areas.

There are legal issues, too. Strike gold (or gas) on your land in America and you will make a fortune. In the UK, mineral rights belong to the Crown, which sells licences to companies to exploit any underground bounty. Of course, the landowner has to be paid but even if shale gas lives up to its expectations, the only millionaires will be among Cuadrilla’s shareholders. In the meantime, the company has promised 1,700 local jobs if commercial drilling is allowed to go ahead.

Talk of thousands of jobs and a Klondike-style boom has a familiar ring to it. People have been promising magical new sources of energy – and fortunes to be made – for decades. Remember the wave-powered generators that were going to free us from dependence on carbon fuels, or tidal barrages that could power half the country with a single dam across the Severn? These technologies showed much promise but all ran into formidable – and unforeseen – economic and technological problems.

Speak to politicians and businessmen in Lancashire and the optimism that one of the UK’s economic backwaters is about to strike it rich is tempered by healthy doses of scepticism.

“We’ll believe it when we see it,” one official told me. Shale gas has been successful in the US (driving down domestic prices by a factor of two) but this is in part due to that country’s low population density – about one tenth that of the UK. Drilling for gas using an aggressive, perhaps polluting technique is one thing under the empty prairies and deserts of Texas, quite another in the densely populated English North-west.

Shale gas may prove to be a game-changer; but unless the sums can be made to add up, and unless the sceptical people of Lancashire can be persuaded that a few seismic rumblings are a price worth paying for a jobs and cash bonanza, the fracking revolution may yet run into the sand.